iPhone XR Weak Sales Demand Further Cut in Production, Analyst Suggests

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iPhone XR Weak Sales Demand Further Cut in Production, Analyst Suggests

iPhone XR went on sale in October

Highlights
  • iPhone XR sales have been weaker than expected
  • Rosenblatt advises 25 to 28 million units production for Q4 2018
  • Apple is believed to produce 32 million iPhone XR units for this quarter

In a new investor note, analyst Jun Zhang from Rosenblatt Securities claims that Apple will need to further reduce production volume of the iPhone XR. The note states that early sales of the iPhone XR were weak, but that 'largely improved' during the 11.11 holiday in China. Even though the sales have improved of the iPhone XR, the estimates by Apple are still very ambitious, and it needs to reduce those production estimates. This comes soon after it was reported that Apple cut down on production orders on all three phones, due to less than expected demand.

The Rosenblatt Securities investor note was obtained by AppleInsider, and it claims that the sales of the iPhone XR improved during the holiday season, as many online retailers provided a discount of 10 to 15 percent. It also claims that the sales of the iPhone XR have surpassed that of the iPhone XS, and are at the same level as the iPhone XS Max.

However, Zhang claims that post the holiday season, the iPhone XR production will see "downside risk". The analyst believes that the current iPhone XR production is still above sell-through rates. Rosenblattt earlier revised its production estimate for the new iPhone models from 90 to 95 million units to 88 million units for the holiday quarter. It has now again revised it down to 74 million units for the current quarter, and 39 million for Q1 2019.

The investor note states that for the current quarter, Apple needs to produce only 25 to 28 million units of the iPhone XR. The firm believes that the company is aiming to produce 32 million units of the iPhone XR in this quarter, resulting into more supply than the expected demand. Furthermore, it speculates that the total sales of the iPhone XS and iPhone XS Max are going to be around 18 million in the holiday quarter.

The investor note says that Apple's fading demand is due to competition from China brands like Huawei, whose Mate 20 series has been very popular in the home market.

"We believe may high-end consumers switched to Huawei's smartphones over the last two years, leading to the company taking share in China not only from Samsung, but Apple as well," Jun Zhang is cited to write in the note.

A recent report states that Apple shocked investors a few weeks ago with a lower-than-expected sales forecast for the Christmas quarter, prompting certain suppliers to issue warnings that pointed to weakness in new iPhone sales. The company has reportedly already informed several suppliers that it lowered its production plan again for iPhone XR.

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Further reading: Apple, iphone xr
Tasneem Akolawala Tasneem Akolawala is a Senior Reporter for Gadgets 360. Her reporting expertise encompasses smartphones, wearables, apps, social media, and the overall tech industry. She reports out of Mumbai, and also writes about the ups and downs in the Indian telecom sector. Tasneem can be reached on Twitter at @MuteRiot, and leads, tips, and releases can be sent to tasneema@ndtv.com. More
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